Custom, Excise & Service Tax Tribunal
M/S. Kay Pan Sugnadh Pvt. Ltd vs C.C.E, Raipur on 13 March, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, PRINCIPAL BENCH NEW DELHI
COURT NO.
Date of Hearing/Decision:13.03.2014
For approval and signature:
Honble Mr. Justice G. Raghuram, President
Honble Mr. Rakesh Kumar, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Appeal No. E/59984 of 2013 along with Stay Application No . E/Stay/60744 of 2013 and Misc. Applications Nos. E/Misc./51527/2014 & 60744/2013
[Arising out of Order-in-Original No. COMMISSIONER /RPR/ C.Ex./77/2013 dated 29.08.2013 passed by the Commissioner of Customs & Central Excise, Raipur).
M/s. Kay Pan Sugnadh Pvt. Ltd. Appellant
Vs.
C.C.E, Raipur Respondent
Appearance:
Shri Rupesh Kumar & Shri Aditya Kumar, Advocates for the Appellant Shri Promod Kumar and Shri Amresh Jain, DR for the Respondent CORAM :
Honble Mr. Justice G. Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO: 51448/ 2014 Per Rakesh Kumar:
The facts leading to filing of this appeal along with stay and miscellaneous applications are, in brief, as under:-
2. As regards the misc. application, one misc. application no. E/Misc./60745/2013 is for early hearing of the stay application and appeal and other misc. application No. E/51527 of 2014 is for restraining the department from initiating the recovery proceedings. Since the appeal and stay application have already been taken up for hearing, these misc. applications are dismissed as infructuous.
3. The appellant are engaged in the manufacture of gutka i.e. pan masala containing tobacco, chargeable to central excise duty. The period of dispute in this case is from August, 2011 to July, 2012. During this period, the appellant were discharging duty liability on the pan masala being manufactured by them in terms of the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 framed under Section 3 A of the Central Excise Act, 1944, read with notification No.42/2008-CE dated 1.7.2008, as amended and notification No.30/2008-CE (NT) dated 1.7.2008. On 12.8.2011, the appellant gave a pre-intimation to the department informing the jurisdictional authorities about their intention to purchase two new Carton Shrink Wrap machines and these machines were received in their factory on 17.08.2011. The Range Superintendent was informed about receipt of these machines on 17.08.2011 and he also conducted verification under Panchnama prepared on that date. On 25.8.2011, the jurisdictional Dy. Commissioner of Central Excise wrote to the Range Superintendent to verify as to whether the carton shrink wrap machines are packing machines as defined under Rule 2(c) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The Dy. Commissioner also directed the Range Superintendent to inform him about the functions of the machines. The appellant supplied all the information about the machines to the Superintendent also informed the Superintendent about the commissioning of the machines. On 7.11.2011, the appellant clarified to the Range Superintendent that the machines are only carton shrink wrap machines for shrink wrapping of the cartons containing pan masala pouches and as such, the machines being wrapping machines do not fall within the definition of packing machines as given in the Pan Masala Packing Machines Rules, 2008. On 9.8.2012, a show cause notice was issued to the appellant for demand of duty amounting to Rs.16,21,58,000/- by treating the two carton shrink wrapping machines as pan masala packing machines. This duty demand was for the period from August, 2011 to July, 2011 and the show cause notice, besides this duty, also demanded interest on the same under Section 11 AB and sought imposition of penalty on them under Section 11 AC. The show cause notice was adjudicated by the Commissioner vide order-in-original dated 29.8.2013 by which the above mentioned duty demand was confirmed against the appellant along with interest under Section 11 AA and besides this, penalty of equal amount was imposed under Rule 17 of the Pan Masala Packing Machines Rules read with Section 11 AC of the Central Excise Act, 1944. The Commissioner in this order held that the machines, in question, which are meant for shrink wrapping of pan masala pouches are the packing machines, as defined under Rule 2 (C) of the Pan Masala Packing Machine Rules, as according to Rule 2 (C), packing machine includes any type of packing machines used for packing of the pouches of the notified goods. Against this order of the Commissioner, this appeal has been filed along with stay application.
4. Heard both the sides.
5. Though this matter was listed for hearing of the stay application only, since only a short issue is involved, the matter was heard for final disposal with the consent of both the sides.
6. Shri Rupesh Kumar and Shri Aditya Kumar, ld. Counsels for the appellant, pleaded that pan masala pouches manufactured by the appellant are packed in cardboard cartons, that the machines, in question, only shrink wrap the cartons by heat shrinkable film, that these machines are the machines for packing of the cartons and not the machines for packing pan masala in pouches, that these machines are not covered by the definition of pan masala packing machine as given in Rule 2 (C) of the Pan Masala Packing Machine Rules, 2008, that in any case, the duty can be demanded in respect of a process which amounts to manufacture and packing of the cartons containing pan masala pouches by heat shrinkable film would not amount to manufacture, that on the same goods, the duty can not be charged twice and that the impugned order, therefore, is not sustainable.
7. Shri Promod Kumar, ld. Joint CDR and Shri Amresh Jain, DR defended the impugned order by reiterating the findings of the Commissioner.
8. We have considered the submissions from both the sides and perused the records.
9. The appellant have installed certain number of pouch packing machines in their factory and there is no dispute that they are discharging duty liability on the pan masala pouches being manufactured by them in terms of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty Rules), 2008, read with Notification No.42/2008-CE, which prescribes the rate of duty per packing machine per month. The pan masala pouches are packed in cartons and these cartons have to be shrink wrapped in plastic film. The two machines, in questions, which were installed by the appellant are the carton shrink wrap machines. There is no dispute that by these machines first, a plastic film is wrapped around the cartons and, thereafter, the same passes through a heated chamber, wherein the plastic film shrinks and sticks to the carton. The departments contention is that these machines are covered by the definition of packing machine as given in Rule 2 (C) of the Pan Masala Packing Machine Rules, 2008.
10. The definition of packing machine as given in Rule 2 (C ) of the Pan Masala Packing Machine Rules, 2008 is as under:-
Packing Machine includes all types of Form, Fill and seal (FFS) Machines and Profile Pouch Making Machines, by whatever name called, whether vertical or horizontal, with or without collar, single track or multi-track, and any other type of packing machine used for packing of pouches of notified goods. The departments contention is that the expression any other type of packing machine used for packing of the pouches of the notified goods would cover the machines, in question, which are the carton shrink wrap machines. In our view, Rule 2 (C) covers only those packing machines, which are meant for packing of the pan masala, in the retail pouches in which the same are normally sold and the definition of pack machine in this rule would not cover the machines, in question, which are meant for shrink wrapping of the cartons containing pan masala pouches. Moreover, Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, framed by the Central Government under Section 3A of the Central Excise Act, 1944 are the rules meant for collection of duty on pan masala manufactured by a manufacturer on presumptive basis by prescribing a per machine per month rate. But for attracting levy, there must be manufacturer of pan masala. Under Section 2 (f) (iii), the manufacture includes any process which in relation to the goods specified in third Schedule involves packing or re-packing of the goods in a unit container or labeling or relebelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the same marketable to the consumer. Thus, if any product is notified in Schedule III of the Central Excise Act, 1944, in terms of the Rule 2(f)(iii), the packing or repacking of that product in unit containers for sale or labeling or relabelling of the containers, including affixing of the MRP or subjecting the goods to any other treatment to make the same marketable to the ultimate consumer would amount to manufacture. Pan Masala containing tobacco i.e gutka, falling under sub-heading no.24039990 figures against sl.no.28 of the third Schedule. Thus, the packing of the pan masala into pouches meant for retail sale or repacking of such pouches into multi piece packages for retail sale would amount to manufacture and Pan Masala Packing Machines Rules, 2008 would be applicable only to those machines which bring into existence such pan masala pouches or multi-piece packages for retail sale, as it is these processes only which would amount to manufacture. The machines, which merely shrink wrap the cartons containing pan masala pouches would not be covered by the definition of packing machines in Rule 2 (C) of the Pan Masala Packing Machines Rules, 2008, as the shrink wrapping of the carton containing pan masala pouches is not a process which amounts to manufacturer under Section 2 (f)(iii). The impugned order, therefore, is not sustainable. The same is set aside. The appeal is allowed. The stay application and also the misc. applications stand disposed of.
(Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) Ckp.